In the following guest post, Jim Epstein and Alicia Epstein Korten, share their thoughts on new language for the new inter-sector of for-profit/non-profit hybrid interests. Their post originally appeared on the CSRwire Talkback blog. It has been edited for inclusion on ChangeMatters.
Business used to be about jobs and profit. Civil society organizations were the avenues to give back beyond job creation and products.
More businesses are building healthy communities, living wages and sustainable products into their corporate DNA. And more civil society organizations are embracing business values. There is a new sector emerging, one that blurs the lines between for-profit and not-for-profit worlds.
We often hear seemingly interchangeable terms like social enterprise, mission-driven business, and benefit corporations as descriptors for organizations blending business principles with common good aims. There are others, to be sure. New language is needed to define this emerging trend.
The Private Sector Has a Broader Mission
Earlier this year, Governor Andrew Cuomo signed into law a bill to bring benefit corporations to the state of New York. “Benefit corporations will mean New York is open for business in an important new way,” said state Senator Daniel Squadron. “Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good.”
This significant legislation supersedes a body of law interpreted to mean that corporations must consider shareholder value before taking into account other stakeholders—including communities, employees and the planet. Six states, in addition to New York, already have legislation, and four more will likely follow in 2012.
The Nonprofit Sector Adopts Business Principles
Change is also happening within civil society organizations, motivated in part by entrepreneurs grounding their philanthropy in business values.
The Skoll Foundation, funded by eBay mogul Jeffrey Skoll, provides grantees funding to develop aggressive engines of growth. Called resource engines, some grantees are using funds to build business principles into their non-profit structures.
One resource engine example, Practice Greenhealth, receives over half of its annual budget from membership dues paid by health providers in exchange for services aimed at greening their hospitals.
Language Is Powerful: The Common Good Enterprise
Searching for better lexicon to describe the ongoing work in this emerging field of activity, we came across a phrase that should be brought center stage: “the common good enterprise,” defined as:
A for-profit or not-for-profit organization whose primary purpose is to promote the well-being of people and/or the planet. The organization generates at least a percentage of its revenue through the sale of goods and services (adapted from Advertising on Higher Ground by Kevin Lynch).
Why “common good enterprise”?
Its power is its clarity.
Common comes from the word “commons,” which describes a relationship to the community as a whole. Common good intuitively includes a regard for the planet, respect for individuals’ human rights, and support of communities.
Enterprise is also self-explanatory—and speaks to revenue generated from the sale of goods and services.
Common good enterprise is clearer than other terms such as the more popular “social enterprise.” Does “social enterprise” exclusively describe businesses? Or non-profits? Does “social” include the planet? Only leaps of the imagination can make the connection.
The labels we use for this new field matter. Easy to grasp language provides a framework to help the public co-create this emerging sector.
Clear terms can translate into financial benefit. Why not pass legislation providing government procurement advantages to common good enterprises—whether companies or civil society organizations? Could such language catalyze new capital pools?
It’s time to embrace “common good enterprise”—a term for organizations using business principles in support of the common good that will help make opportunities this field opens up a reality.
Jim Epstein is the founder and Chairman of EFO Capital Management Inc., a family investment firm based in Washington DC. Alicia Epstein Korten is a culture consultant for ReNual.